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LIVE from the 2014 Skoll World Forum on Social Entrepreneurship

Building off the advance series collection of articles written by delegates and speakers of this year's Skoll World Forum, this section will feature live blogs and pieces from the event in Oxford. We will be covering a wide variety of sessions, panels and discussions on-site. View the live-stream on the homepage, and watch here for real-time articles all week! -- Each year at the Skoll World Forum, nearly 1,000 of the world’s most influential social entrepreneurs, key thought leaders and strategic partners gather at the University of Oxford’s Saïd Business School to exchange ideas, solutions and information. Learn more about the 2014 Skoll World Forum, sign up to our newsletter to be notified of the live stream, view the 2014 delegate roster and discover what themes and ideas we'll be covering this year at the event. Also, read about the seven recipients of this year's Skoll Award for Social Entrepreneurship.


Recap: The ambitious power of AND

Lucy Bartlett

Social Media and Community Consultant, Independent


Cracking the Code on Social Impact

Lucy Bartlett

Social Media and Community Consultant, Independent


Social Impact Bonds: Revealing the Invisible Heart of Markets

Social Impact Bonds: Revealing the Invisible Heart of Markets

April 10, 2014 | 4133 views

Social impact bonds are a new financial export from the UK.  They’ve become a popular financial tool in the US with recent investments escalating to over $10 million for new projects in recidivism, healthcare, and education.  Backed by foundations such as Rockefeller and Bloomberg, and with buy-in from corporates such as Bank of America, they’ve created a stir, offering a different way to finance government-backed social programs.

Sir Ronald Cohen is the architect of these so-called “bonds,” a deceiving name, given that they’re not really bonds.  He spoke in the opening plenary session at the 2014 Skoll World Forum about revealing the “invisible heart of markets” through this new financial tool.

SIBs have four players: an investor (or group of investors), an intermediary (such as Social Finance US/ UK) who set up the SIB, a social service provider (the local NGO who will be utilizing the funds), and the government.  The first SIB was piloted in Peterborough, UK three years ago.  A recidivism project, designed to lower the rate of prisoners who are released and become repeat offenders, it aspires to take the financial burden off the Ministry of Justice by using capital from philanthropic and impact investors.  Only if the project is successful, that is if recidivism rates fall, will the government be required to pay back the investors.

While Sir Ronald Cohen hit the major points on SIBs as a repackaged financial tool, a few questions remain:

  1. If the projects are successful, will the government have cash available immediately to pay back the investors?  will it not take time to see the “fruits” of this project – that is, savings from having fewer prisoners to care for?
  2. SIBs have been packed by many of the same investors in the social sector: Rockefeller Foundation, Omidyar Network, for instance.  Do SIBs have the power to go beyond those who are already plugged into social innovation?  Or are we really such re-channeling funds from the same sources?

Of course, SIBs are not for all social programs, and Sir Cohen made that clear.  They’re only going to be apt for certain projects that are data-driven, proven successful, and in short of government funding.  SIBs will not target the root causes of recidivism or early childhood education or maternal care.  Rather, they will help local non-profits who are servicing these areas to continue with their efforts.  They are not the solution for all social projects but can fuse in capital and help non-profits scale in areas where government resources are limited.

In the US and UK, there are over two dozen SIBs in the works.  The results of Peterborough are due out later this year, which will help us determine if SIBs are truly a new financial breakthrough or not.

  • Damodar Bhartia

    ‘Social Impact Bonds’ appear to interesting Financial Tool, One can
    wish its greater promotion for meeting critical financial needs for the
    selective projects with High Social Impact to improve the Quality of
    Lives and The Standard of Living for The BOP Population world over.
    Identify an subject or area which could impact the people to the maximum extent offering Socio Economic and Health Improvements
    on most immediate to long term basis and the idea could be funded
    via SIBs.
    SIBs could be perhaps structured with attractive features like 100%
    Tax Free Status and kind of Long Term Deep Discounted Zero Coupon
    SIBs could be most desirable to render much needed impetus for
    implementing Social Sector Projects covering Toilet Oriented
    Sanitation Projects to eliminate huge Toiletlessness at Household
    levels in Asia, Africa and Latin America. Side by side at same households Safe Drinking Water Programs could be undertaken.
    Adequate Sanitation/ Household Toilets and availability of Safe
    Drinking Water will impact the Quality of Lives and Work Productivity
    of such households in a very positive and visible fashion.
    It will be interesting hear from Financial & Social Sector Guru as to
    if it make sense and positive interest could be taken to make it

  • David Floyd

    The answer to 1 is that the UK government will have to find the cash to pay the investors if the SIB meets its targets because they have a contract to do so.

    Not sure what Sir Ronald was saying but I think most involved with SIBs in the UK have already let go of the idea that they’re a way to save money (in a direct sense). The overall costs of set-up and management are huge and the Peterborough pilot has been subsidised from a wide range of different directions from many different public sector agencies and charitable/philanthropic funds.

    What they may be is a good way to measure whether new approaches to delivering (in particular) public services actually work and should be scaled up (ultimately using a less costly model).

    2 is a very interesting question. Some SIBs, such as Social Benefit Bonds in New South Wales in Australia have succeeded in drawing new, more conventional sources of finance by guaranteeing some (or in one case all) of the investors’ capital. While this obviously makes sense to investors, it doesn’t really do much to reduce risk to taxpayers!

    I’m not clear why Sir Ronald believes SIBs would be a good way to fund services that already have a proven track record. It that situation, it’s hard to see how that would provide taxpayers with a better deal than paying for the services directly.

  • JeffMowatt

    I wonder how much this thinking derives from social enterprise itself. The Invisible Heart for example, might well have come from our own treatise for an alternative to capitalism, which reasoned.

    “Adam Smith’s ‘invisible hand’ does not mean ‘non-existent’, nor
    detached. It means what it says: invisible. That is, not observable.”

    “Economics, and indeed human civilization, can only be measured and calibrated in terms of human beings. Everything in economics has to be adjusted for people, first, and abandoning the illusory numerical analyses that inevitably put numbers ahead of people, capitalism ahead of democracy, and degradation ahead of compassion. ”

    A decade later, with our focus on poverty and childcare reform in Ukraine, we made a call for social invesment which would displace a corrupt childcare system , placing all children in loving family homes. Unlike SIBs, savings in govermnent spending were to be deployed to create additional social value, after investors had been repaid.

    It was of course a more risky endeavour , but isn’t courage also something associated with the heart, invisible or otherwise?


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